Executor Fees

How it works:
For undertaking his duties, the executor of a
deceased estate is entitled to be remunerated
from the estate. If the remuneration is not
stipulated in the will, then the official tariff will
apply: 3.5% of the value of the estate assets
and 6% of income earned on assets administered
by the executor. If the executor is a VAT
vendor, then the executor’s fee will attract
VAT (currently 15%), with the result that the
total executor’s fee, inclusive of VAT, amounts
to 4.025% of the estate assets and 6.9% of the
income. It is an often overlooked fact that the
maker of a Will can negotiate a reduced executor’s
fee which can then be stipulated in the
Will. This cannot be done after the testator
dies, and in the absence of any agreed reduction,
the legal tariff will normally apply.
In cases where a family member is appointed
as executor, he or she must usually appoint a
suitably qualified person, such as a trust company
or an attorney, to attend to the task on
his or her behalf. The fee for the trust company
or attorney should then be agreed between
the parties when the appointment is made. In the absence of any agreement then the appointed
agent would usually be entitled to charge the
tariff.
It is important to note that the executor’s fee is
levied on the “gross estate”. This is the gross
value of all the property and assets forming part
of the estate, prior to the deduction of liabilities
such as mortgage bonds on fixed property. Thus
the executor’s fee in respect of a property valued
at R1 000 000 would be R35 000 plus VAT,
notwithstanding the fact that the property is
subject to a bond of the same amount, for instance.
If the deceased was married in community
of property, the fee is calculated on the
value of the combined joint estate (i.e. including
the assets held in the survivor’s name)! The
“gross estate” would include the proceeds of
insurance policies of which the estate is the
nominated beneficiary; the proceeds of other
policies, of which the deceased’s heirs or creditors
are nominated beneficiaries, and not the
estate, while possibly being subject to estate
duty do NOT fall into the gross estate as such
and would not attract the executor’s fee.